I am a landlord renting a property that in the last two years has achieved an average of £4200 per month.
We use a "Tenancy Agreement".
Due to supply and demand we dropped the rate to around £3400 per month.
We now have a prospective tenant who wants the property for two years, but should we only agree a 12 month contract because we think that rates could recover at least up to £3800?

Should we warn the new tenant before they sign, that we may well only renew the contract in 12 months at a higher rate?

Mickjoebill

subjecttocontract

10-03-2010, 08:15 AM

Should we warn the new tenant before they sign, that we may well only renew the contract in 12 months at a higher rate

Whats the advantage to the landlord in doing that ? answer = nothing.

mickjoebill

10-03-2010, 22:18 PM

The tenant has said they want the property for two or more years, it is a question of keeping them happy so they will stay when they discover there is likely to be a rent increase. Some have argued that there is more likelihood the tenant will stay and accept the increase if they knew about it when they signed the contract, rather than be presented with a like it or leave it letter two months before the end of the (1 year) contract.

Mickjoebill

matthew_henson

10-03-2010, 22:39 PM

If you want a rent rise in year two you should negociate a two year contract that includes such a rise otherwise you will at the mercy of the market in 12 months.

Is the property mortgaged? do you have authority to let? if so you may want to check the restrictions, most lenders will only authorise a maximum 12 month tenancy.

Either way any smart tenant will request a break clause so if your rent rise is unaccepable in the rental market +12 months they will give notice and negociate.

Also would I be right in saying that you can not increase the rent for a certain period once a tenancy becomes an SPT?

Sadly your property is worth what somebody is prepared to pay for it not what you think it is worth.

westminster

11-03-2010, 14:30 PM

Also would I be right in saying that you can not increase the rent for a certain period once a tenancy becomes an SPT?

As this is not an AST due to the rate of rent, I don't think it would become periodic after the fixed term ended.

jeffrey

11-03-2010, 14:38 PM

As this is not an AST due to the rate of rent, I don't think it would become periodic after the fixed term ended.
True. None of the 1988 Act applies. When the fixed term expires, that's it! Anything later is a new letting.

P.Pilcher

11-03-2010, 14:54 PM

Sounds to me that a two year lease is required with a rent review clause after the first year. As it cannot be an AST, then an appropriate legal expert should be used to draft same.

P.P.

HairyLandlord

11-03-2010, 15:54 PM

Sadly your property is worth what somebody is prepared to pay for it not what you think it is worth.

The OP has not stated any opinion, only what they have actually averaged in the past.

They are thinking about the best way to hedge given that the market can change quite a bit in 2 years.